CbCREs will now use Version 4.0 of the Local File/Master File (LCMSF) schema for lodgments relating to periods starting on or after 1 January 2024. Key updates include:

• Integrated Reporting: The short form (SF) reporting will be incorporated directly into the Message Structure Table (MST), replacing the current attachment-based format.
• Improved Accuracy: By capturing SF data through structured fields, the ATO expects more complete, consistent reporting—crucial for identifying high-risk international tax structures and profit shifting.
• Gradual Transition: Version 3.0 may still be used for earlier periods until its planned deactivation on 1 January 2026.

These enhancements streamline the reporting process, reduce incomplete or inconsistent submissions, and bolster the ATO’s ability to detect and assess international tax risk. For businesses, it means a more structured and predictable compliance framework.

The updated schema focuses on five core areas:

1. Business Strategy & Competitors
   Describe each main business line, its strategy, interrelation with other functions, and key competitors. Align disclosures with annual reports and internal documents for consistency.
2. Organisational Structure
   Outline reporting lines for senior Australian-based personnel, any overseas reporting relationships, and associated changes during the income year.
3. Business Restructures
   Report significant restructures—including changes in ownership, financing, asset transfers, and the launch or cessation of operations—with context and tax impact.
4. Intangibles Arrangements
   Disclose transfers or licensing of intangibles such as IP or goodwill, including connected arrangements and their commercial significance.
5. Simplified Format for Most Entities
   Entities without overseas personnel, restructures, or new intangibles arrangements will benefit from simplified fields, reducing compliance complexity.

Start preparing now:

• Review your current reporting framework for alignment with V 4.0.
• Identify any restructures or intangible transfers that occurred during or before the current period.
• Engage with your digital service provider for system readiness and testing.

• May–June 2024: Draft specifications released and testing begins.
• July–Dec 2024: System builds, stakeholder briefings, and final preparations.
• 1 January 2025: Mandatory use of LCMSF V 4.0 begins.